Vanguard Institutional Index Fund

Transcription

1 Vanguard Institutional Product Summary Seeks to track the performance of the Standard & Poor s 500. U.S. large-cap equity diversified across growth and value styles. Passively managed, full-replication approach. remains fully invested. Low expenses minimize net tracking error. Vanguard Style View : Large Blend portfolio of large-capitalization U.S. stocks diversified across investment styles. Market capitalization Large Mid Small Investment style Value Blend Growth Central tendency Expected range of fund holdings Quarterly Commentary For the quarter ended December 31, the returned 6.64%. Global stock markets were resilient during the fourth quarter, with emerging markets outperforming their developed-market counterparts (a trend that characterized much of 2017). In the United States, stocks hit record highs as investors welcomed tax reform legislation, strong corporate profits, low unemployment, and decent economic growth. The Federal Reserve also acknowledged the health of the economy, raising rates for a third time in December. Although expansionary monetary policies outside the United States supported bond prices during the year, central bank actions suggested a bias toward less accommodation in Information technology (+9.0%), financials (+8.6%), and consumer discretionary (+9.8%) were the top contributors to the index. The sector with the smallest gain was utilities (+0.2%). For the 12 months ended December 31, the index returned 21.83%. The five largest-weighted sectors all boosted results. Information technology (+38.8%), health care (+22.0%), and financials (+22.2%) added the most. Energy ( 1.0%) and telecommunication services ( 1.1%) detracted. People and Process Vanguard Institutional seeks to track the investment performance of the Standard & Poor s 500, an unmanaged benchmark representing U.S. large-capitalization stocks. Using full replication, the portfolio holds all stocks in the same capitalization weighting as the index. The experience and stability of Vanguard s Equity Group have permitted continuous refinement of techniques for reducing tracking error. The group uses proprietary software to implement trading decisions that accommodate cash flow and maintain close correlation with index characteristics. Vanguard s refined indexing process, combined with low management fees and efficient trading, has provided tight tracking net of expenses. Vanguard Equity Group Launched in 1975, The Vanguard Group, Malvern, Pennsylvania, is among the world s largest equity and fixed income managers. As chief investment officer, Gregory Davis, CFA, oversees Vanguard s Equity, Quantitative Equity, and Fixed Income Groups. Joseph Brennan, CFA, Principal and global head of Vanguard's Equity Group, is responsible for all equity index funds. The Equity Group manages indexed equity portfolios covering U.S. and international markets. It has developed sophisticated portfolio construction methodologies and efficient trading strategies that seek to deliver returns that are highly correlated with target portfolio benchmarks. The group has advised Vanguard Institutional since Investment Manager Biographies Donald M. Butler, CFA, Principal. Portfolio manager. Advised the fund since Worked in investment management since B.S.B.A., Shippensburg University. Michelle Louie, CFA. Portfolio manager. Advised the fund since Worked in investment management since B.S., The American University. M.B.A., Georgia Institute of Technology. For institutional use only. Not for distribution to retail investors.

2 Vanguard Institutional Total Returns Quarter Year to Date 1 Year 3 Years 5 Years 10 Years Institutional Institutional Shares (7/31/1990) 6.63% 21.79% 21.79% 11.38% 15.76% 8.50% Institutional Plus Shares (7/7/1997) The performance data shown represent past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, so investors shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month end, visit our website at vanguard.com/performance. Figures for periods of less than one year are cumulative returns. All other figures represent average annual returns. Performance figures include the reinvestment of all dividends and any capital gains distributions. All returns are net of expenses. Note: Institutional class shareholders are required to maintain a minimum balance of $5 million. Institutional Plus class shareholders are required to maintain a minimum balance of $200 million.

3 Vanguard Institutional Quarterly Returns: Institutional Shares Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year-End Assets (Millions) % 3.08% 4.48% 6.63% $140, % 11.96% 120, , , , , , , , , ,847 Quarterly Returns: Institutional Plus Shares Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year-End Assets (Millions) % 3.08% 4.48% 6.64% $91, % 11.96% 91, , , , , , , , , ,776 Volatility Measures R-Squared Beta DJ US Total Stock Mkt Float Adj Idx R-squared and beta are calculated from trailing 36-month fund returns relative to the associated benchmark.

4 Vanguard Institutional Facts Institutional Shares Institutional Plus Shares Number Ticker VINIX VIIIX Newspaper Listing InstIdx InstPlus CUSIP Number Assets (millions) (Total $232,158) $140,591 $91,567 Inception 7/31/1990 7/7/1997 Expense Ratio (as of 11/2017) 0.035% 0.02% Equity Characteristics Top 10 Largest Holdings % of Total Net Assets Apple Inc. 3.8% Microsoft Corp. 2.9 Alphabet Inc. 2.7 Amazon.com Inc. 2.0 Facebook Inc. 1.8 Berkshire Hathaway Inc. 1.7 Johnson & Johnson 1.6 JPMorgan Chase & Co. 1.6 Exxon Mobil Corp. 1.5 Bank of America Corp. 1.2 Total 20.8% The holdings listed exclude any temporary cash investments and equity index products. Number of stocks Median market cap $94.4 Billion $94.4 Billion Average market cap $196.6 Billion $196.7 Billion Price/earnings ratio 23.2x 23.2x Price/book ratio 3.2x 3.2x Return on equity 16.0% 16.0% Earnings growth rate 9.6% 9.6% Equity yield (dividend) 1.8% 1.8% Foreign holdings 0.1% 0.0% Short-term reserves 0.1% Turnover rate (fiscal year end) 4.8% Sector Diversification (% of Stocks) Overweight/ Underweight Consumer Discretionary 12.2% 12.2% 0.0 Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Other Real Estate Telecommunication Services Utilities Total 100.0% 100.0% Sector categories are based on the Global Industry Classification Standard (GICS), except for the Other category (if applicable), which includes securities that have not been provided a GICS classification as of the effective reporting period.

5 Important information Visit our website, call , or contact your broker to obtain a product description and prospectus or if available, a summary prospectus for Vanguard ETF Shares. Investment objectives, risks, charges, expenses, and other important information are contained in these documents; read and consider them carefully before investing. For more information about Vanguard funds, visit or call , to obtain a prospectus, or if available, a summary prospectus. Vanguard ETF Shares are not redeemable with the issuing other than in very large aggregations worth millions of dollars. Instead, investors must buy or sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling. All investing is subject to risk, including the possible loss of the money you invest. Investments in bond funds and ETFs are subject to interest rate, credit, and inflation risk. London Stock Exchange Group companies includes FTSE International Limited ( FTSE ), Frank Russell Company ( Russell ), MTS Next Limited ( MTS ), and FTSE TMX Global Debt Capital Markets Inc ( FTSE TMX ). All rights reserved. FTSE, Russell, MTS, FTSE TMX and FTSE Russell and other service marks and trademarks related to the FTSE or Russell indexes are trade marks of the London Stock Exchange Group companies and are used by FTSE, MTS, FTSE TMX and Russell under licence. All information is provided for information purposes only. No responsibility or liability can be accepted by the London Stock Exchange Group companies nor its licensors for any errors or for any loss from use of this publication. Neither the London Stock Exchange Group companies nor any of their licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the index or the fitness or suitability of the index for any particular purpose to which it might be put. The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or securities. For any such funds or securities, the prospectus or the Statement of Additional Information contains a more detailed description of the limited relationship MSCI has with The Vanguard Group and any related funds. The index is a product of S&P Dow Jones Indices LLC ( SPDJI ), and has been licensed for use by Vanguard. Standard & Poor s and S&P are registered trademarks of Standard & Poor s Financial Services LLC ( S&P ); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ( Dow Jones ); S&P and are trademarks of S&P; and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Vanguard. Vanguard product(s) are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the index. The Russell es and Russell are registered trademarks of Russell Investments and have been licensed for use by The Vanguard Group. The products are not sponsored, endorsed, sold or promoted by Russell Investments and Russell Investments makes no representation regarding the advisability of investing in the products. CFA and Chartered Financial Analyst are registered trademarks owned by CFA Institute. Dividend Achievers is a trademark of The NASDAQ OMX Group, Inc. (collectively, with its affiliates, NASDAQ OMX ) and has been licensed for use by The Vanguard Group, Inc. Vanguard mutual funds are not sponsored, endorsed, sold, or promoted by NASDAQ OMX and NASDAQ OMX makes no representation regarding the advisability of investing in the funds. NASDAQ OMX MAKES NO WARRANTIES AND BEARS NO LIABILITY WITH RESPECT TO THE VANGUARD MUTUAL FUNDS. BLOOMBERG is a trademark and service mark of Bloomberg Finance L.P. BARCLAYS is a trademark and service mark of Barclays Bank Plc, used under license. Bloomberg Finance L.P. and its affiliates, including Bloomberg Services Limited ("BISL") (collectively, "Bloomberg"), or Bloomberg's licensors own all proprietary rights in the Bloomberg Barclays Indices. The products are not sponsored, endorsed, issued, sold or promoted by Bloomberg or Barclays. Bloomberg and Barclays make no representation or warranty, express or implied, to the owners or purchasers of the products or any member of the public regarding the advisability of investing in securities generally or in the products particularly or the ability of the Bloomberg Barclays Indices to track general bond market performance. Neither Bloomberg nor Barclays has passed on the legality or suitability of the products with respect to any person or entity. Bloomberg s only relationship to Vanguard and the products are the licensing of the Bloomberg Barclays Indices which are determined, composed and calculated by BISL without regard to Vanguard or the products or any owners or purchasers of the products. Bloomberg has no obligation to take the needs of the products or the owners of the products into consideration in determining, composing or calculating the Bloomberg Barclays Indices. Neither Bloomberg nor Barclays is responsible for and has not participated in the determination of the timing of, prices at, or quantities of the products to be issued. Neither Bloomberg nor Barclays has any obligation or liability in connection with the administration, marketing or trading of the products. Investments in Target Retirement s are subject to the risks of their underlying funds. The year in the name refers to the approximate year (the target date) when an investor in the would retire and leave the work force. The will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in the Target Retirement is not guaranteed at any time, including on or after the target date The Vanguard Group, Inc. All rights reserved. U.S. Pat. No. 8,180,695; 8,185,464; 6,879,964 B2; 7,337,138; 7,720,749; 7,925,573; 8,090,646 and 8,417,623. Vanguard Marketing Corporation, Distributor.